Times of India , Tuesday, May 06, 2008

Correspondent : Staff Reporter

WELLINGTON: New Zealand said on Tuesday it would delay by two years the entry of petrol and other liquid fuels to its carbon trading scheme to ease pressure on already high fuel prices. The emissions trading scheme (ETS) is due to start next year as part of policies to help the country meet its Kyoto Protocol target of cutting emissions blamed for global warming. Petrol and other liquid fuels were due to be covered by the scheme from next year, which it was estimated would add as much as 8 NZ cents to the price of a litre of fuel. "These changes will lessen the burden on businesses and households which have been facing steeply rising fuel costs," Prime Minister Helen Clark said in a statement. She said the price of petrol had risen 20.5 per cent over the past year, resulting in less fuel being consumed and so already reducing carbon emissions. "In other words, the steeply rising price of oil in the short term is effectively doing part of the job the ETS is designed to do by slowing the rate of fuel consumption and emissions." Clark said the fuels would now be introduced to the scheme in 2011. New estimates released on Tuesday showed that by 2012 the country would produce about 21.7 million tonnes more carbon than allowed under Kyoto. That was less than half the forecast made in May last year and would reduce the cost to the country to NZ$481.6 million ($379 million) from a previous estimate of NZ$1 billion, based on multiplying the excess emissions by a carbon market price of NZ$22.18 a tonne as at the end of March. The speed of introducing the trading scheme and its impact on fuel and power prices had been criticised by business and consumer groups, and cited by the Reserve Bank of NZ as an inflation risk. Clark's centre-left Labour-led government faces a general election before the end of the year and is trailing in opinion polls. New Zealand is a signatory to the Kyoto Protocol, which requires it to reduce greenhouse gas emissions to 1990 levels by 2012. About half the country's emissions come from livestock. The cap-and-trade scheme will work by restricting or capping groups or companies in the amount of greenhouse gas they can emit. Those using less than their limit can sell excess credits. The first stage of the scheme will start next year with a free allocation of carbon credits to foresters, with the aim of increasing commercial forest area by 250,000 hectares (618,000 acres) by 2020. Electricity generators and industry are due to come under the scheme in 2010, and the country's economically key agricultural sector in 2013. Clark's government has said it wants to produce 90 per cent of New Zealand's electricity generation from renewable sources by 2025 from the current 70 per cent level, and to halve transport emissions by 2040. It has also ordered that 3.4 per cent of all petrol and diesel sales be biofuel by 2012. Last month Clark was one of seven winners of a United Nations Champions of the Earth award for driving policies to combat climate change.

SOURCE : Times of India, Tuesday, 06 May 2008